Wyn River contributes towards enhanced restructuring initiatives in the modified European Insolvency Regulation

Written by Nigel Davies on 10 December 2014

On 4 December 2014, the European Commission announced that Justice Ministers had agreed significant changes to the European Insolvency Regulations which have been in place since 2002.

One of the main objectives in the revisions is to promote more use of business rescue and restructuring solutions consistently across all 28 member states, to preserve jobs in potentially viable businesses that until now have often entered slow and inflexible formal liquidation processes. There are also proposed changes to simplify the insolvency provisions covering both groups and cross-border corporate failure.

The EU has been developing a framework for changes for around two years, starting with a suggested package of measures proposed in December 2012. In Juy 2013 it launched a public consultation on attitudes towards rescue and the stigma attached to both personal and corporate insolvency. In October 2013, the representative organisation for insolvency and turnaround specialists, Insol Europe, won a tender to conduct a comparative study into the existing pre-insolvency, restructuring and insolvency processes across all 28 member states. The report on the findings from that study was published in April 2014 (A New Approach to Business Failure and Insolvency). Wyn River is pleased to confirm that our local associate, Ieva Strunkiene, contributed the study inputs for Lithuania in the Insol Europe study and Nigel Davies, with close support from Michael Glazer, the head of our local affiliated firm SEE Regional Advisors d.o.o., contributed the inputs for Croatia. The revisions to the European Insolvency Regulations are expected to come into force in May 2017, according to the EU press statement recently released.

For those interesed in this area, the European Bank for Reconstruction and Development has recently published its own analysis into insolvency and restructuring frameworks across many countries of its operations, not just on legislative content, but also on key enabling areas such as insolvency practitioner licencing, remuneration, ethics and case supervision. You can read the interesting findings of the EBRD study here.